Definition

Noun A type of corporate stock for which no minimum value (par value) is assigned or stated in the company's charter or on the physical stock certificate. Its value is determined by the market.

Usage

This term is used in finance, investing, and corporate law to describe a specific class of equity issuance. It contrasts with "par value stock."

Examples

• The company issued no-par-value stock to simplify its accounting and avoid potential legal liabilities associated with a set par value.
• Investors often find no-par-value stock more straightforward, as its price reflects pure market demand.
• The corporate charter was amended to authorize the issuance of no-par-value common stock.

Advanced Usage

• Accounting Treatment: The entire amount received from the sale of no-par-value stock is typically recorded as "stated capital" or may be split between stated capital and additional paid-in capital, depending on state laws and board directives.
• Legal and Historical Context: Many modern corporations issue no-par-value stock because it eliminates the concept of "watered stock" (stock issued below par value) and provides greater flexibility.

Variants and Related Words

• No-par stock: A common abbreviated synonym for no-par-value stock.
• Par value stock (Antonym): Stock with a nominal face value printed on the certificate.
• Stated value stock: Similar to no-par stock, but the board of directors assigns an arbitrary "stated value" per share for accounting purposes, which functions similarly to a par value.

Synonyms

• No-par stock
• Stock without par value

Related Phrases/Concepts

• Capital surplus: The amount received for no-par-value stock that may be allocated above any board-designated stated value.
• Legal capital: The portion of shareholders' equity, often derived from the issuance of par or no-par stock, that is protected for creditors and cannot be distributed as dividends.

Noun

1. stock with no par value specified in the corporate charter or on the stock certificate